Australia building approvals fall again in December; residential building activity likely to sharply decline in 2019

Australia’s building approvals for December essentially repeated the negative surprise in November, with a fall of 8.4 percent m/m. Approvals were 23 percent lower than a year ago. Trying to smooth things out a bit by looking at the December quarter doesn’t change the picture. 

The number of dwelling approvals in the three months to December is down 11 percent on the September quarter and 24 percent on the same quarter a year ago. A very sharp decline in residential building activity looks set for 2019, notwithstanding the large amount of work yet to be done.

Australian residential building approvals fell 8.4 percent in December, the second big fall in a row. The last time there was a bigger two month decline was in Sept-Oct 2016, but the decline was from a much higher level.

The just-under 14,000 approvals in the month was the smallest outright number since June 2013. Unit approvals led the decline, dropping 18.6 percent m/m to add to the 18.8 percent m/m decline seen in November.

"We think the RBA will factor in weaker residential investment in its forecasts this week. The value of non-residential approvals was also down sharply in the month, though was only off 4.1 percent for the quarter. Still, non-residential approvals for the quarter were 15.2 percent below a year ago," ANZ Research commented in its latest report.